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ringct.sbv
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0:00:01.120,0:00:05.640
Monero is secure, untraceable, electronic cash.
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It is open-source, decentralized, and freely accessible to all.
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In this video,
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we will focus on Ring Confidential Transactions,
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commonly known as RingCT.
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In our last video,
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we illustrated how Monero ring signatures protect senders' privacy
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by preventing transaction inputs from being distinguishable from one another.
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This is accomplished by the use of digital signatures,
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where there is an actual signer hidden among multiple ring members
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to authorize a transaction.
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Additionally, we learned that key images are used to prevent Monero inputs
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from being spent more than once.
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Ring signatures ensure privacy of the sender,
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since inputs are untraceable.
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To increase the privacy of both parties in a transaction,
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RingCT was implemented to hide transaction amounts.
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Prior to the implementation of RingCT,
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Monero required transaction amounts to be split into specific denominations.
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For example,
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an output of 12.5 Monero would be broken up into three separate rings
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in the amounts of 10, 2, and 0.5.
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This technique ensured that there would be ample ring members,
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since a ring signature could only ring together outputs of the same value.
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However, a downside to this process
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is that an outside observer was able to see the amounts transacted.
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To address this shortcoming, Monero activated RingCT in January 2017.
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RingCT prevents privacy leaks by hiding transaction amounts in the blockchain.
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A month after RingCT was activated,
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approximately 98% of new transactions were using the RingCT protocol.
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After September 2017, the use of RingCT will be mandatory for all Monero transactions.
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Today with RingCT,
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newly created Monero firstly resides in outputs that have visible amounts.
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When new Monero is transferred for the first time,
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RingCT outputs with masked amounts are generated.
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As a result, transactions no longer need to be broken down into different denominations.
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This means that a wallet is free to pick ring members from any RingCT outputs,
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which significantly improves privacy.
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It should be noted that Monero ring signatures can't include both pre-RingCT outputs
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and masked RingCT outputs in a single ring,
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so - like newly created Monero -
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a pre-RingCT output must first be converted to a RingCT output
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before it can be included in a ring signature with other RingCT outputs.
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Let's walk through an example,
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and then take a deep dive to see how RingCT works.
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Alice has an output of 12.56
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and would like to send Bob 2.5 Monero.
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Since outputs can't be spent twice,
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Alice needs to spend the output in its entirety and return the change to herself.
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So, Alice's transaction would have one input of 12.56 Monero
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and 2 outputs -
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one that is 2.5 Monero designated for Bob
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and another that is 10.06 Monero,
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which is sent back to her wallet as "change" of the transaction.
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To prove that Monero has not been fraudulently fabricated in a transaction,
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the sum of a transaction's inputs must equal the sum of its outputs.
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Due to cryptographic properties of RingCT,
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Alice is required to "commit" to the amount of an output,
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revealing just enough information for the network to confirm the transaction,
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while not publicly disclosing the amount she is spending.
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Although commitments look like random numbers,
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miners are still able to confirm that the amount of Monero being sent to Bob
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is the same as the amount of funds available.
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Another important aspect of a RingCT transaction is the "range proof",
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which prevents senders from committing to negative values
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in order to secure the supply of Monero.
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A range proof cyptographically proves the amounts used in a transaction
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is greater than 0 and less than some arbitrary number.
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While an outside observer is unable to see the actual amounts in outputs of a transaction,
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they are able to confirm that the transaction is a legitimate one
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that the network should accept.
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As a result of Monero's baked-in privacy features,
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users are able to transfer Monero to whomever they like;
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and no one would know how much was sent
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nor who the sender or recipient were.
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These qualities make Monero a leading privacy-centric digital currency,
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but the innovation doesn't stop there.
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In our next video, we'll discuss Kovri:
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a C++ I2P router
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that will make Monero transactions more secure than ever before.
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If you are interested in what makes Monero the leading privacy-centric cryptocurrency,
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please check out the other videos or visit getmonero.org.